2011 (1) TMI 1173 - HC - Income Tax

Waiver of interest - outstanding demand of interest charged under Sections 234B and 234C of the Income Tax Act, 1961 - Held that - discretion has been exercised by the Commissioner to waive the interest to be payable by the petitioner. But, It is a case of detection wherein the petitioner is said to have not assessed the income he was getting from the money lending business. According to the petitioner, the income was unanticipated. However, without giving a finding on the issue whether the source of income had been accrued then and there or it is a future income on the money lending business, the impugned order passed at Annexure-B by the Chief Commissioner of Income Tax appears to be vague in rejecting the case of the petitioner declining to exercise his discretion, it is for the petitioner to approach the Board under Section 119 of the IT Act or else, to pay the interest as ordered. Accordingly, the petitions are disposed of

Summary

Issues:
Petition to quash order dated 11.2.2009 and 23.3.2010, seeking writs of prohibition and mandamus for interest waiver under Sections 234B and 234C of the Income Tax Act, 1961.

Analysis:

1. Quashing of Orders and Relief Sought:
The petitioner sought to quash orders dated 11.2.2009 and 23.3.2010, requesting a writ of prohibition against the 2nd respondent from recovering outstanding interest under Sections 234B and 234C of the IT Act. Additionally, the petitioner sought a writ of mandamus directing the 1st respondent to consider and grant waiver of the interest charged. The main contention was that the interest levied was not paid as the petitioner applied for waiver under Section 119(2)(a) of the IT Act, which was partially rejected by the 1st respondent.

2. Reasoning behind Rejection of Waiver Application:
The impugned order at Annexure-B stated that the interest under Sections 234B and 234C of the IT Act cannot be waived as the assessee did not fall under specific clauses of the CBDT's circular. The petitioner argued that the Chief Commissioner of Income Tax failed to exercise his power as per the circular and did not provide reasons for denying the exemption to the assessee.

3. Discretionary Power and Vagueness in the Order:
The respondent's counsel contended that the circular did not apply to the case, suggesting that the petitioner could approach the Board under Section 119 of the IT Act. The judgment highlighted that while the Commissioner exercised discretion to waive interest, the order appeared vague in rejecting the petitioner's case without a clear finding on whether the income was accrued at the time or in the future from the money lending business.

4. Disposal of Petitions and Direction to Approach the Board:
Ultimately, the court disposed of the petitions, giving the petitioner two months to approach the Board under Section 119 of the IT Act or pay the interest as ordered. The Board was directed not to enforce recovery during this period, providing the petitioner with an opportunity to seek relief through the appropriate channel.

This detailed analysis of the judgment outlines the key issues raised, the reasoning behind the decisions made, and the directives given to the parties involved, ensuring a comprehensive understanding of the legal proceedings and outcomes.